Aurelia Metals Ltd

I would now like to hand the conference over to Mr. Andrew Graham, Interim Chief Executive Officer. Please go ahead.

Thanks, Melanie, and thanks to everyone for joining us this morning to hear about what are a strong set of results for the March quarter. On the call with me today is Martin Cummings, our CFO, and Peter Trout, our COO. So you can follow along. We've released the presentation that we'll refer to during this call on the ASX website and we'll refer to the slides as we go through those. Just to provide a bit of context before I turn to the slide back, overall we think this is a very strong sort of result for the quarter and we're very pleased to be able to share those with you today. Just touching on a few high points given the strong result extended across the board in the business. Firstly, there's a real step change in operating performance. 26,000 ounces produced, all in sustaining costs of 1,884. It's certainly a material improvement from where we were from the December quarter. And definitely, as we'll get to later on, it gives us confidence in our guidance for the year. With that, and obviously it flows from that strong cash flow, pleasingly across all of our assets, operating cash flow from the assets in excess of $30 million and has allowed us to extend our cash balance to over $39 million at the 31st of March. So it puts us in a much stronger position than where we were. We obviously released the Federation update last week. We'll talk a bit about that today because we recognise we haven't given uh shareholders a chance to hear from us on that yet other than through the announcement and also a chance to ask questions on that um and finally you know despite the focus on cash and costs we have been investing in exploration we recognize the importance of that and you've all seen through the quarter um some strong results come out from our exploration programs both um in and near mine at peak but then also some regional ip work we were doing around hera I will now turn to the slide pack and start on slide four and I suppose the point is that those strong set of results is impossible without the input of everyone in our business and one of the things that's really been pleasing me is the fact that every single person in our business is really pushing to a common goal, working together to improve the business and deliver some strong results and it was really, I'm pleased for the whole team that we're able to put out such a strong set of quarterly results today. It's good reward for all of that effort. One of the more telling items to report on is safety. And I'm extremely pleased to be able to say we had no recordable injuries throughout that first quarter. People often say that a strong safety performance goes hand in hand with a strong operational performance. And this is probably further evidence of that. I think it's pretty clear that When people know what they're meant to be doing, if they're focused on what they're doing, have thought about their task, have planned ahead about their task, you get a good safety result. Similarly, you get a good production result, and we've certainly seen that. And the other pleasing bit with that, it was not at the time of huge stability within the business. If you think about what's occurred through the quarter, Heria did come to the end of its life. We took that plant to, or started taking the plant to care and maintenance during the quarter. And similarly, Peak hasn't been without its changes. We have fully demobilised Pybar, for example, from Peak by the end of that quarter as well, moving very much to under-operated mining. So in a relatively unstable period for the business, to get no recordable injuries, a fantastic outcome. My hat's off to everyone in the business for achieving that. Just to touch on the right-hand graph on that side, recordable environmental incidents, we did have one to talk through, a minor in that we had a minor fire at the batch plant at peak in a storage area, came from a faulty light bulb and smoke leaving the site being classified as recordable environmental incident, but certainly no lasting consequence on that one. I want to turn to the next slide then, slide five, for those following along, on the outlook for the business. I summarised our result for the year today, the half one plus the March quarter, against our guidance. And I can say, as I've alluded to earlier, that we are maintaining guidance based on the performance of the business to this point, three quarters of the way through the financial year. Gold had a particularly strong quarter. and we're now tracking at 85% of our guidance for the year. So it puts us in a very strong position to bring home that gold production. Similarly with the other commodities, they're all sitting at 75, 77% of our full year guidance, three quarters of the way through the year. It's a good place to find ourselves and gives us every confidence that we can achieve guidance across the board. All in sustaining, I know we've had a number of questions from people in the past you know with the half one sitting at 2600 as to whether the 2300 guidance was achievable certainly below 1900 for the March quarter gives again every confidence that that guidance number is certainly achievable going forward just thinking about what's coming to us I wouldn't want to take this quarter and just project it straight out into the last quarter of the year. There are a few things, as everyone knows, and as I mentioned earlier, HERA has moved to care and maintenance. So we do lose that production from HERA, and Peter will talk about that in a little bit more detail in a moment, just around the strong finish it did have. just be assured that that was factored into our guidance when we set that in December so it's not as though there's anything new or surprising in that change. This quarter also two items which are working through actually this month just as a regular routine piece, relining of the mill at the peak will be done and also we will be installing a man riding cage in the shaft at peak which will result in some Southline downtime during that period. However, we will be relocating people into the Northline while that gets done. And the real big thing for us on that is the speed with which we can then get people to and from the job at peak, which will give us some real benefits. Anyway, I think it's... I'll pause at that point in the overarching elements. And you're probably very interested in the details of how things played out through each of the sites. So on that note, I might hand across to Peter, who can then take us through these site slides from that deck.

Thanks, Andrew. Just to pick up on Andrew's commentary, it's really pleasing to report a good set of results for the March quarter, particularly given the changes happening at our peak and harrow sites and delivering those changes and these good metal production results without a serious injury. across the operations. I'll pick up on the site discussions, starting with slide six, the Peak Mine. I guess the highlight for the quarter for Peak was the higher grades that we were mining from the underground operations there, which clearly flowed through into the better metal production. All was mined from five different areas across the north and the south mine, and we saw stoking fronts in a couple of those areas move into higher grade zones as we progressed through the stoking sequence. And probably the more pronounced grades we saw were in the Kronos deposit, particularly for lead zinc, and Perseverance Steeps for gold. And in fact, the gold grade benefited from a positive reconciliation against the geological model over the campaigns we ran in the quarter. In terms of mine ore production, we were looking to get higher output for the quarter, but we were held back by some poor drill and blast results in two of our slopes early in the quarter, and also from labour availability in some of our contracted services. We've addressed most of those issues now and are looking forward with our owner mining crews, which are now fully resourced, to put that behind us. As Andrew mentioned, during the quarter the underground mining services contract with Pybar was finished up by mutual agreement at the end of March. As part of that change, Redpath came in to take over the long-haul drilling and cable bolting services from the start of April. What this allowed us to do is effectively bring forward at low cost the final stage of the owner mining transition. So we now have ownership of the core mining fleet at peak, and we're using that to start to drive some productivity improvements across the site. In the process plan, volumes were restricted at times by lower mined oil tonnages, which is particularly early in the quarter, and some periods of very high lead zinc grades that reduced the throughput rates and impacted also the zinc recovery to concentrate. At periods, we were mining combined lead-zinc grades above 30%, and the only other source we had available for blending was running at 12% combined, which did cause us to throttle back the plant performance there. Now, where possible, we do blend the lead-zinc ores to maintain a consistent feed grade through the float circuit, and when we're able to do that, we do see better recovery and concentrate grades. In fact, in March, we ran a trial to mimic the grind size and the flotation reagent conditions for Federation oil, and we're able to see some good results there over a week-long period where we could provide steady-state feed to the float circuit. I think another positive trend from peak is a sustained reduction in mining costs, which we reported on in the December quarter. We've also identified some further cost and productivity improvements, and we're pursuing those through the remainder of this calendar year, seeking to maintain and improve our cash margins. As we move now to slide seven, I would really like to commend our HERA team for what was an outstanding quarterly result. In fact, they outperformed the modified production plan that we announced in December. The chart on slide seven of the presentation deck shows the 43% improvement in gold production and also the reduction in oil and sustaining costs to about $1,700 per ounce and what a change that was from the December quarter. Our management team at site, our employees across the business, and also our site contractors really did a great job dealing with some difficult conditions. Our plan was to run hard right through to the end and come to a short, sharp stop, and that's exactly what the site team delivered. We did have the benefit of lateral development that we finished in the earlier part of this financial year, which started from three different mining areas. And what that meant is we could sustain good ore delivery to the surface and the process plant could run unconstrained at full capacity. And that was the key driver to the higher precious and base metal production. That's a bit of a saddle note. Processing operations finished on the 27th of March and the site has quickly transitioned into care and maintenance preparations. We've recovered all the valuable assets from the underground mine and actually turned off the primary fan and sealed the portals. Our mining contractor Redpath has demobilised from site and have left those key pieces of mining equipment that were required to restart the Federation decline development. Our surface contractors are currently demobilising and we're tracking very well to place the process point into hibernation by the end of April. Given the transition to care and maintenance at HERA and what that means, it's worth looking back on the contribution that HERA has made to our company and the local community. The project was commissioned in 2014 as Australia's first operating asset and was expected to extract about 1.9 million tonnes over a five and a half year operating off. Since commissioning, however, the mine has produced 3.2 million tonnes of ore over nine years. It supported 180 full-time jobs and contributed about $216 million to the local economy, which is an outstanding outcome. We're now looking forward to the next chapter of mining in the district, which is the development of the Federation Project. And it's pertinent to point out that the Federation Project already has a 4 million tonne production target in front of it. Moving now to slide 8, just to talk to the performance at our Dargs mine. You'll see that quarterly production increased there to about 9,600 ounces, and that flowed through to a healthy contribution in terms of group cash flow. The operation reached a couple of milestones during the quarter. It processed its millionth tonne of ore and also moved past 100,000 tonnes of gold production since commencing operations in 2019. We were able to process at higher rates during the quarter thanks to the development consent modification received in December and mill feed tonnage lifted by 9% and that was the driver of the higher gold production. Our mined ore production did drop back a bit and that was partly due to a very strong December quarterly result and the site team had to work through several slope production and backfill disruptions over the quarter and have got us now back on track. We had accumulated high opening ROM stocks and that meant the mill processing volumes weren't impacted although we did have some downtime events caused by some unplanned power outages. In the underground mine, development advance again outperformed our expectations and the decline has reached the lowest mining level. What this good progress allows us to do is to reduce development in the coming months and we've already transferred one of the two development jumbos from DAGS to PEAK to assisted PEAK. And then the final note on DAGS, we completed the underground infill and extensional diamond drilling program early in the quarter. And the results from that work are currently being incorporated into the site's life and mine plan update. And at this early stage, it indicates that we will have a marginal mine life extension. Beyond that, it was indicated in the production target released last October. And on that note, I might hand over to Martin to talk about our financial outcomes. Thanks, Peter. So turning to slide nine of the presentation, and as Andrew and Peter have outlined, The improved operating performance this quarter resulted in a significantly stronger financial position at the end of March. We finished with $39.3 million in unrestricted cash, up from $23.7 million at the end of December. This is an increase of over $15 million. Pleasingly, this is actually a genuine increase in cash with our metal sales and supply payments made, all in line with our standard processes. All of our assets were cash positive and generated a combined $30.2 million of cash flow from the operations, around $10 million higher than the prior quarter. As Peter outlined at peak, we benefited from both strong production and metal sales and lower costs, resulting in a cash flow of $14.4 million. I'll note that this is lower than the December quarter, but that prior period included concentrate sales relating to September. The team were able to finalise the mining contract with Pybar during March, which now supports our ongoing cost reduction activities as an owner miner, and it did result in a favourable year-to-date throw-up in mining costs of around $2 million. SARG's cash flow of $9.2 million was very strong this quarter compared to the $1.6 it generated in the prior quarter. We did sell around 1,700 more ounces this quarter from the sale of concentrate in December, but it was still a very consistent quarter. DAGS is now clearly benefiting from the recent strength in gold price, and it is something we'll factor into our thinking about the strategy for the asset during its remaining life. And as Peter mentioned, HERA had a very strong finish to operations, with the transition to care and maintenance executed extremely well, and it did result in metal production and cash flow that exceeded our plans. There is some remaining concentrating DORA to sell this quarter, which will help offset costs associated with the move to care and maintenance, and the payment of remaining supply invoices in April. Our growth in capital exploration spend has been maintained at minimal levels whilst we complete the refinance, with development spend on Federation to ramp up post that announcement. As I've updated on recent calls, in January we received a tax refund of $9.8 million relating to our FY22 tax return. Given it's likely that we will incur another tax loss in the FY23 tax year, there is an opportunity under the loss carryback provisions for another tax refund once we submit the FY23 tax return later this calendar year. It is possible that that tax refund could be higher than what we received for FY22. And then moving to our debt facilities, we made our regular quarterly repayment of $4.05 million. on the term loan and cash back to another $5.1 million in performance bonds in March. Our term loan balance is now reduced to just $8.6 million and our restricted cash backing at the performance bonds has grown to $46 million. The drawn balance of the performance bond facility is unchanged at $56.8. As we will close these facilities down shortly when we establish the new facilities, we've made some changes in March that were possible due to our strong liquidity positions. We chose not to extend the undrawn $10 million working capital facility, which matured in March, given it was unlikely to be required in the near term. We also cancelled the remaining headroom of $8.2 million on the performance bond facility, as we have no requirement in the near term for further performance bonds to be lodged. Both adjustments mean we avoid paying unnecessary commitment fees to maintain those facilities. The final movement in the cash waterfall on the slide relates to working capital. which was an unfavourable movement of $8.7 million. The primary driver of this is due to our lower trade creditors' balance. Our operations spent approximately $17 million less this quarter relative to the prior quarter, which resulted in $8.5 million less trade creditors at the end of March. We do expect this to come down further in April as we finalise supplier payments in relation to HERA, But as I mentioned earlier, we also have some sales to finalise, which will help offset some of that from the cash perspective. I talked about the higher gold price earlier with Dards, but just to reiterate, Aurelia is benefiting from these higher gold prices right now with only a modest hedge book of just over 4,000 ounces hedged, with deliveries out to September 2023. The average price of those contracts is $2,640 an ounce, which is not materially lower than the current spot price. We do have some quotation period hedges for recent concentrate shipments, but these are all very short dated with contracts out to June. As we move into a capital intensive phase with development of federation, hedging is a tool that we will use to manage the balance sheet, but it will be done in a measured way that considers all of our metal exposures. And finally, in relation to the refinance, I can assure you it continues to be our top priority. The release of the Federation feasibility study update this month was an important input into financier due diligence, so we did need to sequence that release ahead of them finalising a facility. We are in the midst of documenting terms at the moment, and once an announcement is made, we will commence remobilisation of Redpath to Federation to restart development activities. I do look forward to updating you on the new financing arrangements in due course. Thanks for your time this morning.

I'll now hand the call back to Andrew.

Thanks, Martin, and thanks also, Peter, for those very detailed and clear explanations. I'm going to pause briefly, though, on slide 10. And those following along will see a beautiful photograph of one of our sites in the early morning. And just as an example of some of the things we're doing around cost improvement, the fact it's embedded in everything we're doing. We did recognise we needed some updated photographs of our sites. We could have got an expensive professional photographer to go and do that. Given they'd only be there for a short period, they probably wouldn't have captured the essence of our sites. So instead, Brightspark in the organisation decided to run a competition where employees were able to take photographs and submit them. And in time, there will be a winner and there will be a calendar that comes out with those photographs. And that's one of the photos displayed there on slide 10, all part of our Working Smarter program, which is a good segue into slide 11, where we just touch a little bit on what we're doing around organisational renewal. I've talked about this quite a bit in the past. And, you know, I think we've got nine ticks on this page. You know, it's a small subset of a very large number of things that we are doing across the business. And I've chosen to highlight a few of those this morning. Working through site by site, HERA and Federation, it's been mentioned a few times, that strong finish to the HERA operation in its life. Credit to Rob and Nick down there on site for really driving that outcome and the entire team. The conditions to the end required management and the team there certainly managed them extremely well. So everything we had hoped to do in December when we talked about the new mine plan, we have been able to do. And as mentioned earlier, care and maintenance is expected to wrap up tomorrow. The other elements in there, obviously Federation Development Consent we've talked about in the past, a very important step for us, really unlocked the ability to bring forward funds at Federation into production, therefore bring forward revenue. And Peter will talk a little bit about that in a moment. when we talk about federation optimisation. That's the third tick I've got there against HERA Fed. We obviously put out the federation update last week and included a very large number of initiatives to really bring down costs and more than offset the inflationary impacts we're seeing. We'll talk a little bit about that as well. Very important step for us. Going forward to HERA and federation, finalising that, and maintenance at HERA, and as I mentioned, it's going well. So it will be done as expected, fairly swiftly. And then, as Martin has mentioned, once funding is secured, we'll then begin the remobilisation to the Federation site. I'm still expecting that in this current quarter. At Peak, a lot of work going on. Peter mentioned the transition to owner mining. We'd like to thank PIDAR for their contribution there at Peak But I take the view that if you've chosen to be an owner-miner, you should be an owner-miner. And this transition needed to end. It was good we were able to do that in a mutually agreeable way and allow us now to really focus on making the most of PEAK with our own people operating our own equipment. So it's nice to see that transition now in place. And it gives the general manager there the tools and the ability to get on and take PEAK to where we know it can go. One of the strengths of PEAK is it's been a very strong contributor to our Working Smarter program. And even yesterday, we just had a winner each month on idea generation and the quality of those. And I think the last two winners came from PEAK. So it's really great to see ideas still flowing to improve our assets across the board and our company across the board. And we've had some fantastic traction through our Working Smarter programs. I think, though, we do recognise it can do better. And a real focus for us starting through this quarter is an ongoing improvement program, but more of a step. And what can we do differently at peak to make its overall unit cost lower, to improve its productivities? And we see in the team, they have already identified a number of things that they can be doing. That will flow into a broader piece I've talked about in the past around the optimisation of COBAR for us as opposed to thinking about our COBAR assets as a series of discrete operations. What can we do to optimise the overall value we can get from our COBAR business? Touching on DAGs, it was mentioned the processing limit increase that we got through December has certainly paid dividends for us and continues to with higher throughput than we otherwise would have been able to do. It itself has been a strong contributor to Working Smarter, which is Excellent. It's already run well. It's costs are competitive. There's always ways to work better, and it's really great to see that team embrace that. The other one that was mentioned by Peter, that additional extension on infill drilling is finalised. That's always coming back. We're now thinking about how that flows through to a life and mine plan, which is well and truly in progress at the moment. Now, I mentioned that we wanted to talk a little bit about the Federation update. I recognise we put that out last week. We didn't have a call around that, knowing this quarterly call wasn't too far off. Just at a very high level before I pass over to Peter, I had to go all the way back to the AGM. The feasibility study, in my mind, is never a finished piece of work that you don't ever reopen. And we always recognise that there's things that we could do to further improve that study and further improve the project. And the goal through this piece of work was to try to capture some of that. Obviously, we'll see every day the inflation environment we're in, and we've certainly seen other projects in the industry see their capital costs run away from them on the back of that higher inflationary environment. We're not immune from that. We insulated somewhat, ended up not building a new plant. we just barely online um so we've got lower capital spend and less exposure to things like equipment and those sorts of things um but we're not immune from it so one of the the hopes through this update was that we were able to combat that inflation um and you'll see as you can on slide 12 at the table on the bottom certainly you know capital first uh scope or we've certainly combated that inflation in that space through a whole bunch of needs and that was For me, you kind of can look at the release and look at the total capital, 143 versus 145, and figure, well, not much has changed. But the reality is a lot of things we've done within the overall project to really fight that inflation, come in at a competitive cost, and also improve the operability and the timing of cash flow from that asset. So very, very pleased with the outcome of that update. One of the benefits we had was HERA moving to Kera Maintenance when it did. We had already assumed some benefit from Federation being 10 kilometres away from the fully operational HERA mine. However, now that it's moved to Kera Maintenance, we've been able to really take advantage of what HERA had, particularly from the underground equipment. But I'll let Peter talk a bit more about all of that. So passing over to you, Peter.

Okay, Andrew, thank you. I guess in terms of what we've done at Federation, we've really looked at three main areas. The first is the mine design and the mine plan. The second one is looking at scope refinements. As Andrew says, with some of the changes happening in the business and just some time and perspective on things, we'll be able to make some positive impacts there. And lastly, and combined with that, is a revised cost estimate. And the good thing about that is we've maintained some pretty compelling project economics at Federation. And that's despite a reduction in the zinc price, if we look at the like-for-like spot price NPVs compared to the October feasibility study announcements. Going on to slide 12, I thought it would be helpful to expand on some of those points. Firstly, with the mine design, we've gone through and looked at that and just made some changes to the layout. And principally there is the reduction in the gradient of the excess decon, taking that to a slightly shallower gradient. does two things for us. The first one is that we can move to a figure eight layout in plan view rather than the spiral we had in the feasibility study. That layout actually extends the axis of the decline and gives us a better platform to conduct infill drilling along the strike length of the deposit. And of course, the lower gradient, whilst it might add some meters into the initial development requirements, it does support higher truck productivities. Also given the change to the time of expiration decline and the recent receipt of the project's development consent, it has allowed us to bring forward stoke ore production compared to what we'd allowed for in the feasibility study. The feasibility study had assumed that the expiration licence would still be valid and the mining lease and associated development consent would not have been granted at the time we'd accessed ore. We see that circumstance is changing now and that has allowed us to bring forward some stoke ore. And that will be prioritised to feed to our peak process plant with the aim of fully utilising that capacity before we restart the HERA process plant. So apart from the unit cost benefits that will derive at peak, it also allows us to have higher pay abilities for the metal that goes out in the lead and the zinc concentrates. And that compares to a combined lead and zinc concentrate that could be produced from HERA. And that's a departure from the feasibility study, which was based on operations at HERA continuing until 2024. We've also had time to refine the scope elements and the site layout, and they've provided us with some more confidence around the capital cost estimate, and also allowed some of the capex to be reduced or deferred. So an example here is the regrind mill, Plants or Peach, where we had carried forward a higher level estimate. We've now done some more detailed engineering, and that gives us more confidence in the pricing that sits behind that installation. We're also looking to move the tiling filter and storage shed from HERA site to peak. That gives us a lower risk pathway to delivering the volume of tailings we need for paste fill at Federation. In other areas, we've actually compressed the site footprint, just some of the experience we gained during the initial development of the site and a fresh set of eyes to it. For example, the services corridor between the two sites, we're able to trim back the amount of vegetation disturbance there. So as well as reduction in land clearing costs It's also allowed us to remove some of the biodiversity payments we'd have to make for the disturbance of that vegetation. And lastly, as Andrew's mentioned, the transition to care and maintenance at HERA has allowed some of our existing assets and infrastructure to be used instead of purchasing new items, which is what the feasibility study assumed, given the assumed concurrent production from both sites. Things like refuge chambers, pump stations, secondary fans, jumbo boxes, those sort of things, do not have to be purchased new, and we've actually allowed to refurbish those items from HERA. We've also allowed for a temporary construction camp to accommodate the additional personnel. That's no longer required, and that's a direct benefit of about $2.7 million to the CAPEX. So all in all, we're really, really pleased with the outcome of the feasibility study update, and we're now preparing ourselves for project execution activities and looking to resume site activities towards the end of the June quarter. Andrew, my turn back over to you.

Great, and thanks for that extra detail, Peter. Just to wrap up the last slide, the end of the one we covered today, slide 13, just on exploration. You will recall when we were thinking about what we were up to as a business and looking at what we needed to do around cash management, we did pull back quite heavily on some particularly surface exploration holds. We did, however, continue... to retain in our plans and now execute and we're going to continue to execute underground drilling at peak part of that particularly is we know the value of what we find at peak near mine and if it's close to development and it's a step out to extension those tons can very quickly turn up in a mine plant and turn up in a mill and turn up as revenue so it is an important piece for this business to continue to do And we have had some great success this year as we put out in our release towards the end of March. Some free items just to touch on then, stepping away from workings, I suppose. And the Chesney East Goldlands, you can't get much closer to workings, 10 metres from existing underground development. And I'll just put an example in here, 9 metres at 21 grams gold. And there's plenty of other good drilling in the release that went out in March from that. Obviously, given its proximity to existing workings, our ability to turn that into something in a mine plan quite readily is there, and the team on site at PEAK are thinking about that at the moment as to how and when that may come into the plan. So really great, and I'm sure as we continue to drill, we'll find more of these types of things at PEAK. Stepping a little further out, and we're not talking far, 100 metres from existing underground workings at Burrabungee, 16 metres and almost 2% copper. It's just an example there from the drilling. Definitely an interesting piece. It's not that far from surface. And there is a bit of a gap between Chesney and Burra Bungee. It's a plan now for us to drill from underground out of Chesney, even back into this one, to see whether there's continuity of mineralisation between Chesney and Burra Bungee. So very exciting, good to see good copper grades in there, and something we'll continue to follow up. Short one just to touch on, as we did in the March release, was Queen V, now 10Ks from peak, so still absolutely within a very, very easy trucking distance. Some exceptional copper, 4.2% copper in the section highlighted in the pack. So good grades, certainly economic grades, how that then comes together it'll need more work but you know it's one of many many exciting targets and the slide that shows some of those and we've got well over 100 targets that we want to chase and it's just probably worth talking about that so that is an annual process we do to prioritize our activity in exploration it's an active piece we're working on effectively as we speak And one of the issues we have is we have so many opportunities and priority targets is what orders do you do them in and how much do you spend on them? So it's a good challenge and a good problem to have. It's something we're working through at the moment. Just to round out, early in the quarter, we did put out IP results. This time we're down closer to HERA and Federation. Interestingly, we did four IP surveys. All of them came back with results that weren't some sort of follow-up. So again, it's all of these opportunities, priority opportunities in the mix that we need to think about scheduling and budgeting. Anyway, look, I recognise we've covered a lot today and that's probably because there's been a lot going on. We will, however, now pause for questions to see if anything needs further clarification.

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Adam Baker with Macquarie. Please go ahead.

Hey, Andrew and team. Good quarter.

Just wondering, the South Mine shaft refurb, how long is this roughly expected to take? And just wondering if you can counteract the... loss in ore tonnes from that mine and extracts more from the north mine during that period. In addition to this, the Swag Mill Rewine, just wondering how long that is expected to take. Thanks. Hi Adam, it's Peter here. I'll answer both your questions. You've cracked our strategy on how we're going to deal with shaft outage at the south mine. It's about a five to six day changeover period. We're actually replacing the man-riding cage for the first time in the history of that shaft. There's some corrosion there. Whilst we're doing that, we'll redeploy our workforce from the south mine to the north mine and focus on copper ore from the north mine. We currently have some good stocks ahead of the mill, lead zinc ore, and we'll finish over the next week or so. More lead zinc will come to surface to feed the mill, so the mill shouldn't be impacted materially by that particular outage. We also mentioned the Saginaw reline. We had to defer that from March into April, and that was largely around labour availability. That has been completed, but instead of our normal three-day reline program, we can only work on day shift due to the available labour. So it actually took us closer to six days, and the mill came up late last week and is operating through to today when it goes on to a pause for the operator change. They're separate events, and we've had plans for those to minimise the disruption in mill feed over the course of the quarter.

Sure. Yeah, pretty sure the outage is there, really.

Nothing too material for the guidance, and you've stuck to guidance for FY23, so that's clearly baked in there. And maybe just switching to the darks, now that the decline has finished, how many autumns have you got left to extract in the mine plan there? I think the best guidance I can give you at this point of time is look at the production target that we released last year, where we stand at the moment. And as we flagged in the announcement, we do expect a little bit of upside there coming through from the latest program. But we'll have some more to say about that when we release the updated mineral resource statement or reserve statement and production target early in the September quarter.

Good stuff. All headed on. Thanks, guys.

Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Michael Evans with Acova Capital. Please go ahead.

Good morning, Andy. Hey there, Martin. Thanks very much for the update to that. I thought I'd ask about the grades at...

peak obviously was the mind-seeking thing something we're not privy to and sort of when modeling it was sort of I'll work on the reserve grades and the grade was a big driver of production at peak in both the copper gold and the lead zinc it looks like and you mentioned also Perseverance was getting some good grades with some positive reconciliation Just wondering if you can give us some guidance on what you expect to see in the short term on those grades and whether that, how big is that positive reconciliation at first appearance? I don't know, 5, 20% will that affect the June quarter, September quarter going in there, 5, 24? And should we, you know, going forward for the next few years, should we still be using

using the reserve grade for modelling purposes, I suppose, and if not, why not?

Just some more detailed colour around that would be great. Thanks. Certainly, Michael. I think addressing what should be used for modelling, what we use is our resource model reserve grade for our planning, and we update that with grade control information as that comes through. So for our longer-term planning, we're using resource and reserve, essentially, and that's a logical approach to use as well. As you're probably aware, there is a high degree of variability in the grades at peak, in terms of gold at least. It's quite patchy, nuggety, and that does make the estimation difficult. And while we did see reconciliation up to 40% above the grade control model, I would caution that that's not an ongoing event. We've also suffered negative movements or reconciliations against the grade control model. So I would not be factoring that in as an ongoing event. positive uplift on the resource and reserve models. Perseverance steeps did outperform on gold, but it's also, along with Kairos, the more difficult one to estimate. We also saw some good uplift in gold grades out of Jubilee, which is a bit unexpected, particularly based on historical performance. I'll sound like a bit of a whinger, but with the Kronos areas we're mining at the moment, some of Kairos, we are mining exceptionally high grades. And as much as we try and sequence those things to try and get high and low grade come together, there are times that we simply can't do that. And those grades have reconciled pretty well. Leds on the money is in confection low. And I think on that basis, using the reserve and resource grades going forward is appropriate.

Okay. And... And just reminding the Perseverance Deeps, how long do you expect to be mining that? How much of that is in the mine plan?

We've taken most of the Perseverance Deeps all there at the moment. We are going back and having a re-look at remnant areas on the basis of the higher gold price we're seeing at the moment. And we do have plans to do some extensional drilling beneath that. But in terms of substantial stoke tonnage from Perseverance Deeps, that's going to four lanes.

okay okay great and just a final one more I've got you I'm sure you've got your quarterly in front of you if I just go to the peak data towards the back the appendix one detailed quarterly physicals the peak copper the mine grade for the gold I'm on page 13 have you got that Peter

Is 1.44 in the process goal grade 3.75? Is that right? What's driving that? Does that mean Nick called it to be much lower? Yes, I should step back and say that we reconcile not on a monthly or period basis. We reconcile on campaigns. So at the end of each campaign, we reconcile back. So what you're seeing there in the nine grades is a combination of reconcile grades and model grades for the period. which is why they're different to the mill feed grades, which are the source of the reconciled numbers. Yeah, that gold grade is starkly different, isn't it, on what's mined and what's processed? So there's the factors I've described, and it also depends where they come from. As I said, we treat the Percy Deep Saw as copper, and it has a significantly outperformed the grade control model.

Okay. Yeah, OK, that's great. I'll do some more thinking on that, Peter, and I'll get back to you offline if you've got any more questions. Thanks very much. I'll pass it on. Thanks. OK.

Thank you. The next question comes from William Thurlow with Ord Minutes. Please go ahead.

Yeah, g'day, Andrew, Martin, Peter. Thanks for taking the call and good job with the result. I appreciate the conversation on the grade profile. That was certainly one that I wanted to dig into as well. So just a basic one then. Just wanted to understand if there's a quantum for the cost associated with the HERA care and maintenance that would be incurred into the fourth quarter and then separately whether there's any other notable sustaining and growth capex items on the horizon aside from those associated with federation. Okay, well, Martin here. What we're going to see in April, we've got around $7 million of costs left to come out from HERA just in terms of trade payables and other working capital unwind. Offsetting that, we do have revenue and so there's some concentrate revenue and some dore. That would be in the order of $2 to $3 million. So there will be another bit of unwind in that last quarter, which we've factored into our plans In terms of ongoing costs, there is a monthly charge of a couple hundred thousand dollars to actually maintain the operation, to maintain the inspection routine and to keep the operation really ready in a state that when we come back to mill there, that the site's been looked after. I might just hand to Peter in terms of the sustaining capital coming through this quarter. There's not a lot of other sustaining capital coming through. DAGs, as I mentioned, the decline of REITs at lowest level, that's been the main source of sustaining capital at DAGs, so that will fall away this quarter. There are some routine maintenance-related tasks at peak that we're undertaking, but nothing major compared to what we've seen in some of the prior quarters.

OK, wonderful. Thank you very much. I'll pass it on.

Thank you. We are showing no further questions at this time. I'll now hand back to Mr. Graham for closing remarks.

Thanks, Melanie. Look, I'll just touch on the high points again just to leave them with you. Firstly, as a management team, but also as a total business of employees, we're definitely super pleased to have gone through the quarter with no recordable injuries. It's a very strong outcome for the business and we're hoping to obviously keep that going. through the next quarter and the ones thereafter. Obviously, as I touched on at the start, step change in operating performance, 26,000 ounces, normal sustaining of 1884, vastly better than where we had been on the half year to date and certainly brought us definitely in line with our guidance target. Strong cash flow, as Martin talked about, pleasingly across all three of our assets. allowing us to grow that cash balance to in excess of $39 million at the end of March, putting us in a strong position as we finalise funding and move to development of Federation. The Federation update, Peter took us through in good detail. We are very pleased with the outcome there, particularly the fact that capital came down rather than going up despite the inflationary environment. And more pleasingly, from my point of view, I think we've got a much more robust plan to develop better operability, things like decline gradients and the layout of the figure eight and those sorts of things will allow us to really deliver that mine with confidence. And finally, as I mentioned on the last slide, exploration, despite our real focus on cash, still investing in exploration and still getting excellent success, which again, just highlights the value of our tenement package there in Cobar. So just to wrap up, certainly very proud of the entire Aurelia team. It's an excellent set of results. I'm hoping that the entire team's proud of their achievements.

So thank you for your time today.

That does conclude our conference for today. Thank you for participating in our disconnect.